Was writing advertising and brochure text taxable when the author delivered only typed words or a computer disk and someone else created the artwork?

Plain-English summary

An advertising copywriter created words for print ads and brochures and delivered the text typed or on a computer disk. Clients gave that text to a separate graphic designer, and the writer did no layout, artwork, or finished-product work.

California treated the writer as an author performing a nontaxable service. Delivering the original words did not become taxable merely because the text arrived in physical or disk form.

The limits were important: adding graphics or artwork would make that item taxable, and selling copies of the original work rather than the original authorial work also would be taxable.

What this means for you

Copywriters

Original words alone fit the opinion's nontaxable author-service treatment.

Creative agencies

Layout, graphics, artwork, finished pieces, and reproduced copies can change the tax result.

Accountants and tax professionals

Document whether the client buys original authorship, finished artwork, or copies of an existing work.

Common questions

Q: Was original advertising copy taxable?

A: No. The writer was treated as an author performing a service.

Q: Did delivery on a computer disk make the charge taxable?

A: No, under the described original-text-only facts.

Q: What if the writer also supplied graphics or artwork?

A: The opinion said the charge for that item would be taxable.

Q: What if the writer sold additional copies?

A: Sales of copies of the original work would be taxable.

Citations and references

• California Revenue and Taxation Code § 6051
• California Sales and Use Tax Regulations 1501, 1540, 1541, and 1543

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.0061
• Original supporting opinion: 515.0061 PDF

Original ruling text

515.0061

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-2641

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

January 27, 1994

GRAY DAVIS
Controller, Sacramento
BURTON W. OLIVER
Executive Director

REDACTED TEXT
This is in response to your letter dated January 3, 1994, regarding the application of tax to advertising copy that you provide to your clients. In your letter you state: "I am primarily in the business of writing print ads and brochures for a variety of clients. I submit my work to them in typed form or on computer disc. The clients then turn my work over to a graphic designer, who is responsible for incorporating my written words into the final artwork. I do not do any layout work, nor do I create the finished, tangible product. I simply write the words that are made part of the finished product by someone else." A retailer's gross receipts from the retail sale of tangible personal property in California are subject to sales tax unless the sale is specifically exempt by statute. (Rev. & Tax. Code § 6051.) On the other hand, the charge for providing a service is not subject to sales tax. Regulation 1501 states that, "the transfer to a publisher of an original manuscript by the author thereof for the purpose of publication is not subject to taxation." We consider this conclusion from Regulation 1501 applicable to the circumstances you describe, that is, since you provide words (text only) to your clients to be used by them in certain materials you are considered an author performing nontaxable services. (Regs. 1501, 1543.) Please note, however, if you provide your customers with any copy that also includes graphics or other artwork, your charges for that item would be subject to tax. (Regs. 1540, 1541.) In addition, Regulation 1501 states that “the tax would apply to the sale of mere copies of the author's works or the sale of manuscripts written by other authors where the manuscript itself is of particular value as an item of tangible personal property and the purchaser's primary interest is in the physical property.” Therefore, the sale of copy is taxable to the extent that you sell copies of the original work. Assuming you are not selling reproductions of the original copy and that original copy includes no artwork, you are an author performing nontaxable services.

January 27, 1994

2

515.0061

If you have further questions, feel free to write again.
Sincerely,
Pat Hildebrand
Staff Counsel
PH:cl
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